Consider an overlapping generations model with the following characteristics: Each generation is composed of 100 individuals. The fiat money supply changes according to Mt = 1.25Mt-1. The initial old own a total of 50 units of fiat money (M0 = $50). Each period, the newly printed money is given to the young of that period as a lump-sum transfer (subsidy). Each person is endowed with 10 units of the consumption good when born and nothing when old. Preferences are such that individuals wish to save 5 units when young at the equilibrium rate of return on fiat money.

(a) What is the real rate of return on fiat money in this economy?

(b) How many goods does a young individual receive as a subsidy in period 1?

(c) What is the price of the consumption good in period 1, p1, in dollars?